Third-party funding of disputes has evolved
across multiple jurisdictions into a new and
dynamic asset class for investors in private
markets.
Its relative novelty, for example in the UK, derives from
the evolution of law that historically prevented third parties
supporting litigation in which they had no connection as
defendant or claimant (known as “maintenance”). A stronger
form of maintenance is “champerty,” being maintenance
with a view towards making profit. Changes to the law
have enabled third parties to fund litigation, provided certain
conditions are met and maintained.
Perhaps unsurprisingly, private funds, such as private equity
and venture capital, offer a parallel model that can be applied
to litigation funding; in this second article in our firm’s series
examining the nature and detail of the opportunities that
continue to develop around third-party financing and the
increasing commercialization of disputes, we explore some of
the considerations that arise when structuring a private fund
that invests in litigation funding. Other funding models, such
as via listed stock market corporations, are also viable but are
outside the scope of this article.
